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Factors to Note Ahead of Micron's (MU) Q1 Earnings Release

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Micron Technology (MU - Free Report) is slated to report first-quarter fiscal 2022 results on Dec 20.

The company projects fiscal first-quarter adjusted earnings of $2.10 (+/- 10 cents) per share. The Zacks Consensus Estimate for its quarterly earnings, pinned at $2.10 per share, remained unchanged over the last 60 days. The consensus mark indicates a 169.2% surge from the year-ago quarter.

Meanwhile, Micron estimates revenues of $7.65 billion (+/- $200 million). The consensus mark for revenues is pegged at $7.66 billion, suggesting a 32.6% increase from the year-earlier period.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 6.7%.

Let’s see how things have shaped up before this announcement.

Micron Technology, Inc. Price and EPS Surprise Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Factors Likely to Impact Q1 Results

Micron’s first-quarter results are likely to have benefited from solid memory chip demand across all its end-markets. The pandemic-led work-and-learn from home trend has fueled significant demand for personal computers (PCs) and notebooks.

The remote-working and online-learning trend amid the COVID-19 crisis has also stoked demand for cloud storage. Furthermore, lockdowns and social distancing measures have fueled the usage of online and e-commerce services globally, compelling data-center operators to enhance their capacities in order to accommodate the demand spike for cloud services. All these factors are likely to have aided MU’s top line during the quarter under review.

A solid uptick in the dynamic random access memory (DRAM) bit shipments for the cloud, graphics, PC and notebook, 5G and automotive markets is anticipated to have acted as an upside during the to-be-reported quarter.

However, industry-wide component supply constraints are expected to have hurt Micron’s top and bottom lines in the first quarter. On its fourth-quarter fiscal 2021 earnings conference call, Micron warned that bit shipments for the DRAM and NAND memory chips are set to decline in the fiscal first quarter as PC manufacturers are adjusting their memory and storage purchases due to the shortage of other components required to complete PC assembling.

Furthermore, MU is witnessing supply constraints for certain integrated circuit components, which are expected to somewhat negatively impact the bit shipments in the quarter under review.

Memory chip maker’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade spat between the United States and China. The restrictions on exports to Huawei might have hurt the top line of the memory chip maker.

Additionally, a higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing costs, is expected to have strained the margins.

Moreover, operating expenses are expected to have flared up during the fiscal fourth quarter due to the resumption of the previously delayed fiscal 2021 salary hikes in the fiscal third quarter. This might have hurt Micron’s margins and profitability during the quarter under review.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Micron this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Micron currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combinations

Per our model, CarMax (KMX - Free Report) , MSC Industrial Direct Company (MSM - Free Report) and Constellation Brands (STZ - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

CarMax is slated to report third-quarter fiscal 2022 results on Dec 22. The company carries a Zacks Rank #3 and has an Earnings ESP of +6.75% at present. CarMax’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missed the same on one occasion, the average surprise being 20.5%.

The Zacks Consensus Estimate for quarterly earnings is pegged at $1.50 per share, suggesting a year-over-year improvement of 5.6%. KMX’s quarterly revenues are estimated to increase 47.2% year over year to $7.63 billion.

MSC Industrial Direct carries a Zacks Rank #3 and has an Earnings ESP of +0.34%. The company is scheduled to report first-quarter fiscal 2022 results on Dec 22. MSC Industrial Direct’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters while matched the same on one occasion, the average surprise being 1.9%.

The Zacks Consensus Estimate for MSM’s first-quarter earnings is pegged at $1.18 per share, representing year-over-year growth of 7.3%. The consensus mark for revenues is pinned at $837 million, reflecting a year-over-year increase of 8.4%.

Constellation Brands currently carries a Zacks Rank #3 and has an Earnings ESP of +2.13%. The company is expected to report its third-quarter fiscal 2022 results on Jan 6, 2022. Constellation Brands’ earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missed the same on two occasions, the average surprise being 8.8%.

The Zacks Consensus Estimate for Constellation Brands’ third-quarter earnings is pinned at $2.82 per share, reflecting a year-over-year decline of 8.7%. STZ is estimated to report revenues of $2.28 billion, which suggest a decrease of 6.5% from the year-ago quarter.